In today’s economic landscape, companies are continually searching for methods to lower the bottom line and increase profits. One means of accomplishing this is to consider contract manufacturing. It is a way to create a cost-effective and viable partnership. It can help a company streamline production while boosting productivity.
What Is a Contract Manufacturer?
This business model is a form of out sourcing and a type of jobbing. The manufacturer will, directly or indirectly, approach the contract manufacturer with a specific design or, in pharmaceutical or food products, with a formula. The contract manufacturer (CM) will then provide a quote of what it will cost it to produce the components. They will base this on:
* Specific processes required
* Labor involved
* Tooling required
* Cost of materials
If the bid wins, the CM will proceed to manifest the design, produce the required parts and then ship them to the new partner.
Why Choose a Contract Manufacturer?
A CM is able to provide a manufacturing company with an alternative. A CM can help a business achieve a healthy bottom line by streamlining the manufacturing process. It offers solutions the company cannot afford or is unable to accomplish on its own. It acts as a production facility as well as a warehouse. In the case of fabrication, a contract manufacturing companycan obtain more easily and cheaply metal material for the production of your specialized components. Simply stated, CMs have the specialized work force, equipment, technological expertise and proficiency in areas your company does not have and cannot afford to obtain.
Finding the Right Contract Manufacturer
If you want this form of partnership to be successful, a company needs to carefully research the field. It is important to not only look at the credentials of the CM e.g. certification, but also their reputation. Can the CM deliver consistent high quality components? Can they handle the demands of big and/or small runs? When it comes to metal fabrication and welding, is it a full-service shop? Are the employees highly skilled and specialists in all areas including customization?
Contract Manufacturing
By entering into a partnership with a CM, you are relying on it to help your business remain successful. They are to help you reduce production costs while maintaining a high level of quality. They must be able to deliver the components on time. All this, they must accomplish within a set budget or else, a company would not need to consider contract manufacturing but would perform these tasks in-house.
